Hedging Through Currency Futures | CA Final SFM
If the company that is planning a hedge the foreign exchange risk, is an importer and has to settle the payment in foreign currency, it will have the need to buy such foreign currency.
If the importer company decides to hedge the foreign exchange risk through currency futures, then it should take a long position in currency futures, if the currency future contract is given in foreign currency. Inversely, it should take short position if currency futures contract is available in local currency.
If the company is an exporter and has to receive the amount in foreign currency, it will have the need to sell such foreign currency.
If the exporter company decides to hedge the foreign exchange risk through currency futures, then it should take a short position in currency futures, if the currency future contract is given in foreign currency. Inversely, it should take long position if currency futures contract is available in local currency.
February 02, 2021
February 02, 2020
April 04, 2019
Congratulations…!! CA Harish Wadhwani for scoring 93 marks in SFM (CA Final)
Securitization CA Final SFM Securitisation a chapter in Strategic Financial Management (SFM). This is an important chapter from the CA Exam point of view as well. The concept has been explained with a comprehensive example, to make sure the concepts are very clear. It mainly talks about Debt Securitisation, Mortgage-Backed Securities, Securitisation Process, Credit Rating Continue reading
Things you should do before your CA Final Exams Clearing CA Final Exam is clearly not a simple cake walk. You need to be extremely committed to attending your CA final coaching classes. As the subjects are numerous, you need to study your lessons as and when they’re taught your respective CA final Coaching class. Continue reading
CA final SFM has a few topics which carry a fine weight-age in each trial which are Foreign Exchange Risk Management, Capital Budgeting, Derivatives, and Portfolio Management. But in its place of starting with a topic keeping huge concepts start with a bit lighter note and extremely interesting niche i.e. Bold Valuation. Thereafter full acquisition Continue reading
A Two way Quote indicates a set of two different rates of exchange known as Bid Rate and Ask Rate. In a Two Way Quotes, the rate at which bank will buy the currency and the customer will sell the currency is known as Bid Rate. The rate at which bank will sell the Continue reading
Exchange Rate A rate at which one currency can be exchanged with the other. It is a rate at which one currency expressed in terms of the other. It is a rate at which a currency can be bought or sold. Direct Quote & Indirect Quote
Need for Corporate Valuation Along with the enterprise growth, number of stakeholders also grows. Presentation of annual financial statements becomes. Curiosity of the stakeholders to understand the ‘true worth’ of their enterprise becomes translated to the concept of ‘valuation’. The market analysts, financial intermediaries, and the academicians, also attempt to apply their valuation approaches Continue reading
When Forward Interest Rate Agreements are regulated through the “Exchange”, it will become Interest Rate Futures. However, the mechanism of IRF is different from FRA. The system is designed in a manner that interest rate is made up as a marketable product. The following example, will clarify as to how interest rate futures are Continue reading